Question

QUESTION 16 The financing activities section of the statement of cash flows includes activities that affect current assets and current liabilities. True False QUESTION 17 The statement of cash flows helps users evaluate the company's earnings per share evaluate management decisions predict future net income predict the growth of a company's assets Click Save and Submit to save and submit. Click Save All Answers to save all answers.

Answer 1

Ques 3. After closing all Revenue and Expenses accounts. Weiss Company had a debit balance in its summary account of $5,000. The proper entry to record the closing of the income summary account would include:

Ans. (b) a credit to Retained Earnings of $5,000 . After closing revenue and expense account into income summary, income summary should match the net income from the income statement and then we will add it to the retained earnings in the statement of retained earnings. So retained earnings account will be credited with the amount of $5,000.

Ques 4.  The current ratio reflects current liabilities divided by current assets:

Ans. (b) False because the current ratio is the ratio of all current assets to current liabities. It shows the ability to pay short term creditors by the selling of current assets and also shows working capital position i.e. current assets - current liabilities.

Ques 6. All information necessary for preparation of formal statements is found in the work sheet's income statement and balance sheet sections:

Ans. (b) False because Information from the accounting journal and general ledger is used in the preparation of company's financial statements.

Ques 7. An adjusted trial balance is generally prepared after the financial statements are completed.

Ans. (b) False. An adjusted trial balance is the non financial statement in which the balances of all accounts are showed after the the adjusting entries are made.

Ques 8. Obligations that are expected to be paid after one year or the operating cycle, whichever is longer, are classified as current liabilities.

Ans. (a) True. Current liabilities are usually paid in cash or other assets within a fiscal year or operating cycle,whichever is longer.

Ques 9. The accounts involved in the adjusting process are those that may be reversed on the first day of the next accounting period.

Ans. (a) True. The accounts involved in the adjusting process or simply reversing entries will be recorded on the first day of the next accounting period.

Ques 10. Long term investments, such as land held for speculation, should be classified:

Ans. (d) Other assets because Long term investments including land purchased for speculation,and other long term investments are included in other assets.

Ques 16. The financing activities section of the statement of cash flows includes activities that affect current assets and current liabilities:

Ans. (b) False because operating activities section of the statement of cash flows includes activities that affect the current assets and current liabilities. Operating activities include the non cash expenses plus changes in working capital i.e. Current assets - Current liabilities.

Ques 17. Statement of cash flows helps users _______.

Ans. (b) To evaluate management decisions. Statement of cash flows is very important ot users (investors, shareholders etc.) because it shows how much extra cash a company has generated. The statement of cash flows provides useful information to management, investors, creditors becuase it is important for company's financial health. It helps in predicting cash flows and ability to pay debts and dividends and also can evaluate the management decisions.

Earnings per share is evaluated through balance therefore first option is incorrect. We can only predict future cash flows not future net income thats why third option is also incorrect. We can't predict the growth of company's assets because it only deals with cash flows so last option is also incorrect.